FHA loans surge while USDA numbers decline

SCOTSMAN GUIDE: Participation in two of the government’s main loan programs for first-time homebuyers ran in opposite directions in 2015.

Bolstered by a wave of refinances and a cut to the insurance premium in January of last year, Federal Housing Administration (FHA) loan counts and volumes continued a year-long surge in the fiscal fourth quarter, the agency reported.

FHA’s overall loan counts in fiscal 2015 (October 2014 through September 2015) rose nearly 42 percent, to 1.1 million loans. Volumes were up nearly 58 percent, to $213.1 billion. These increases have been largely driven by refinances of existing FHA loans, which rose dramatically in the fourth quarter. The program also received a big boost from a 0.5 percentage-point cut in the annual insurance premium on Jan. 26, 2015.

“The reduction in the insurance premium on FHA really did have an impact, along with the lower interest rates that we saw this year,” said Daren Blomquist, vice president of RealtyTrac. “That combination was a sweet spot for FHA.”

Blomquist also said that first-time homebuyers have been purchasing more houses this year, helping FHA’s numbers.

“We definitely saw evidence in 2015 that first-time homebuyers are coming back,” Blomquist said. “It may not be as quickly as some people want, but they are coming back. Greater FHA pickup is one sign of that. I think it is a big sign of that.” Click here to read more.